Discuss the du pont analysis for the past two years

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Reference no: EM132705643

PART I: Company Name Is Johnson & Johnson Find Johnson & Johnson Company''s most current yearly ratios and compare them to their past year's ratios. Only two years of data is required; however, if you want to include more due to a significant event this is okay.

1. Introduction: Why are ratios useful? What are the five major categories of ratios? Remember you might not have all five ratio categories or maybe some ratios might not matter.

2. Liquidity: Look at the current and quick financial or liquidity ratios. Are they "good" for your company? How would they be used by management to run the business, investors for valuation purposes, and bankers for lending purposes? Is your quick ratio important or not?

3. Asset Management: Look at your organization''s Days Sales Outstanding (DSO) inventory turnover and total asset turnover. What are your impressions? Does your organization even have inventory?

4. Debt: Look at your company's debt position. This includes leverage ratios, etc. Some companies may not have these ratios if they have no debt. What can you conclude from these ratios? It is suggested that you look at total debt and TIE. Total debt is your total liabilities divided by your total assets. Is your organization seasonal, could a slowdown in the economy hurt?

5. Profitability: Look at your corporation's most current operating ratios (Profit margin ratios, ROA, and ROE). What can you say about these ratios or one in particular? Compare the ratio(s) to the previous year.

6. Market Value: Look at the most recent P/E and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company?

7. Du Pont Analysis: Discuss the Du Pont analysis for the past two years just using ROA. Has net profit and asset turnover gone up or down? What has ROA done?

8. Altman Z-Score: Calculate your companies' Altman Z-Score. You can use this template to calculate the Z-Score. Z-Score Calculation (5:24) shows how to calculate this ratio using Yahoo Finance. Is the company solvent or do they have a high chance of failure?

9. Free Cash Flow (FCF): Calculate your firm's FCF from the most recent year data. Do not forget to use the statement of cash flows to find depreciation and capital expenditures. Morningstar.com gives the latest FCF. Has it gone up or down?

Reference no: EM132705643

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